Tax revenues exceed 2019 projections
Tax revenues exceed 2019 projections
Sound macro-economic performance coupled with political stability resulted in the Kingdom collecting some $6 billion in tax last year, up more than $1.485 billion on the government’s target of $4.56 billion for the period.Of the figure, $2.26 billion was collected by the General Department of Customs and Excise, and $2.3 billion by the General Department of Taxation.
Prime Minister Hun Sen said in December that revenues from the departments are a key contributor to the Kingdom’s economic growth, with government targets surpassed by November 9.
“The revenue collection target for the General Department of Customs and Excise was $2.26 billion, but the government has collected some $3.01 billion – $758 million or 33.5 per cent more than projected.
“We expected the General Department of Taxation to generate $2.29 billion, but it has already collected $2.63 billion, exceeding the target by $345 million,” Hun Sen said early last month.
Cambodia Chamber of Commerce (CCC) vice-president Lim Heng on Thursday credited the higher than projected revenues to sound macro-economic activity and political stability, saying they had fostered a positive environment for businesses and investment.
“We import a lot of goods to address the sharp increase in domestic consumption, which reflects Cambodia’s greater purchasing power. This will generate further revenue.
“With the increase of new businesses last year, and existing firms and investments also growing, the government was able to generate more revenue from taxes,” Heng said.
Garment Manufacturers Association in Cambodia deputy secretary-general Kaing Monika echoed Heng, also noting that economic stability had contributed to the “remarkable increase”.
“The remarkable increase in tax revenue confirms the resilience of the Cambodian economy and more effective tax collection. Moving forward, the General Department of Taxation should focus more on broadening the tax base, rather than squeezing existing taxpayers,” he said.
Monika added that the one per cent pre-payment of tax on income remained a challenge for the private sector.
“Abolishing this type of tax may attract more investment, particularly foreign direct investment. The government wouldn’t lose any revenue on an annual basis, it would just wait to collect it at the end of the year.”
The International Monetary Fund (IMF) pointed out in its Article IV Consultation report that the increase in revenue had helped maintain low public debt and increased government deposits, but urged for restraint in non-developmental spending.
“Directors considered that fiscal governance should be further improved to raise revenue collection, manage fiscal risks from public-private partnerships, increase spending efficiency, including by strengthening public investment management, and reduce opportunities for corruption.
“Publishing the medium-term fiscal framework and implementing a debt-based fiscal anchor would help safeguard fiscal sustainability over the medium term,” the IMF report said.
According to the 2020 National Budget Law – recently signed off by King Norodom Sihamoni – the government is set to generate $5.272 billion in tax revenues this year.
“We know that the government has not increased the tax rate or introduced new taxes, but the private sector wants a level playing field for all taxpayers,” the CCC’s Heng stressed.
